Once introduced in the Lok Sabha, the Bill will be sent to the Parliamentary Standing Committee on Finance for further deliberations
New Delhi: The government is likely to introduce the simplified Income-Tax Bill 2025 in Parliament on Thursday. The Bill is expected to bring in the concept of "tax year" and abolish the archaic and complicated terms like "previous year" and "assessment year". The simplified Bill will replace 298 sections and 14 schedules in the six-decade-old Income-Tax Act 1961.
Once introduced in the Lok Sabha, the Bill will be sent to the Parliamentary Standing Committee on finance for further deliberations. The statement of objects and reasons of the new I-T bill says that the Income-Tax Act passed in 1961 has been subjected to numerous amendments since its passage 60 years ago. “As a result of these amendments, the basic structure of the Income-Tax Act has been overburdened and language has become complex, increasing the cost of compliance for taxpayers and hampering the efficiency of direct tax administration,” it reads.
The new Bill comprises 536 sections, 23 chapters and 16 schedules in just 622 pages. It does not bring in any new taxes, only simplifies the language of the existing Income-Tax Act 1961. The new Bill seeks to replace the Income-Tax Act, which has become too voluminous due to the amendments made over the last 60 years and is expected to come into effect from April 1, 2026.
The new Bill has omitted redundant sections, like those relating to fringe benefit tax. The Bill is free from "explanations or provisos", thereby making it easier to read and comprehend. Also, the word "notwithstanding", which was used excessively in the Income-Tax Act has been done away with in the new Bill and almost everywhere replaced with the term "irrespective".
Union finance minister Nirmala Sitharaman had announced in Budget 2025-26 that the new tax Bill will be introduced during the ongoing session of Parliament. She had first announced a comprehensive review of the Income-Tax Act 1961 in the July 2024 Budget.
The CBDT, which comes under the finance ministry, had set up an internal committee to oversee the review and make the Act concise, clear and easy to understand, which will reduce disputes and litigations and provide greater tax certainty to taxpayers. Also, 22 specialised subcommittees have been established to review the various aspects of the Income-Tax Act.
